Word-of-mouth advertising is when customers help promote your company and products by telling others about them. In cases where your company establishes strong word-of-mouth advertising, this can have a positive effect on your business if the word-of-mouth generated is positive. As effective as word-of-mouth advertising can be, however, it can also have its downside.
The biggest plus side of word-of-mouth advertising is its cost effectiveness. Word-of-mouth advertising is the least costly form of advertising there is available. Your customers do the advertising work for you. The only cost of word-of-mouth advertising is your company satisfying customers. Satisfied customers like to talk about good deals, excellent customer services and great companies they feel they discovered.
Limited control over the advertising content can be a downside to word-of-mouth marketing. Word-of-mouth marketing is inconsistent. To combat some of this problem, you can do your best to ensure your products and customer service are the best they can be. The goal is to create satisfied customers. Still, regardless of how good your company is and how many positive customer reviews you generate, there will always be someone who has something to complain about. It only takes a few vocal dissatisfied customers to give your business a negative perception with others, even if those negative comments are inaccurate.
People expect a company to tout the benefits and quality of its products and services, but when real customers give positive feedback, it can lend more credibility to a company. The unbiased positive feedback based on the feedback and reviews of people who have used your company or purchased from your company with happy results can be more believable and help convince potential customers to use your business.
A downside of word-of-mouth advertising is the limited coverage. A satisfied customer can tell a friend about your company, or even two, who will then use your company's products or services and tell their friends. This type of advertising is usually limited to family and friends. It can take longer to spread the word than advertising online, in national publications, or on TV and radio.